I posted this on The PPT last week. Enjoy.
After mind numbing declines in commercial real estate shares, I think it’s important to draw a distinction between the “truly impaired” and those who are operating poorly. In commercial real estate, over the next 4 years, a staggering amount of debt is due, as well as expiring lines of credit. Like the banks, most of these names are highly levered and dependent upon entities for capital. Being that the CMBS market is shut down, it is vital for real estate companies to secure lines of credit and proper refinancing. However, due to the state of banking, this is a next to impossible task, at the present.
One very important topic, which is not being talked about, is the tenuous position of life insurance firms. Most people are unaware, but life insurance firms, traditionally, have been a very reliable source of capital for real estate companies. Due to recent write downs in the insurance industry, many of the big players have announced the suspension of lending to commercial real estate firms. In total, more than a dozen firms have announced cut backs in lending, including: Aegon, Allstate, Hartford, Northwestern, Principal, Nationwide, Genworth, Sun Life and Protective Life. Annually, insurance firms provide anywhere between $20-25 billion in financing. That number should drop by at least 35% in 2009.
In order for the REIT industry to deleverage to traditional levels, it is estimated they will need to raise $95 billion in financing in 2009. Going out a few years, that number balloons into the 100’s of billions. Thus far, in 2009, cre firms have raised just $386 million in equity, compared to $5.2 billion in ‘08 and $6.7 bill in ‘07. In other words, they will not be able to fill the massive gaping holes in their respective balance sheets, via dilutive secondary offerings. They will be forced to sell valuable assets at fire sale prices and/or secure huge lines of credit from a beleaguered banking industry. Most likely scenario: the government will bail them out.
Here are some notes on a variety of real estate names:
PSA: Balance sheet is fairly good. The company retired $200 mill in debt, at a 35% discount. With less than $30 mill in maturities, over the next two years, and more than $1bill in cash, PSA will be a survivor.
BXP: Adversely affected by carnage in the finance sector. They have a little more than $600 mill due, over the next two years, and another $1.8 bill due between 2011-2012. They will likely need to raise capital, after 2010.
OHI: Excellent balance sheet. They are well positioned to withstand the current environment, with only $48 mill due, over the next 4 years and a $400 mill line of credit, OHI will survive.
MAC: Great assets, horrendous balance sheet.With $552 mill due in ‘09, $765 due in ‘10 and more than $3.2 bill due between 2011-2012, MAC will need a miracle to stay alive. At the present, they have total cash of $170 mill and a line of credit of $370.
SLG: The market is pricing in a “Draconian Scenario” for NYC cre. Between ‘2009-2011, SLG has more than $1.5 bill due. The real test will come in 2012, when more than $2.3 bill comes due, with another $3.5 bill due thereafter.They will need to raise capital, after 2010.
FR: Terrible balance sheet. The company will need to raise a significant amount of capital, over the next 2 years. They were especially affected by the Circuit City bankruptcy, with more than 1.3 mill sq. ft. of space being vacated, as a result. FR needs to raise more than $500 mill in new capital, by 2011. Then in 2012, they have another $649 mill due. With $25 mill in cash and a limited line of credit, I think it’s safe to say: FR is toast.
FUR: Stupid management. They have a total of $4.4 bill in debt and they think it makes sense to buy beaten down REIT stocks, on the open market. The company bought 3.5 mill shares of LXP @ $5.60. They have a common stock portfolio of about $30 mill, up from $1 mill in ‘08. In other words, they just started buying stocks. Why? They have cash of $73 mill and a line of credit of $100 mill. However, they exhibit stupidty on a grand scale, over a number of years. A few years back, in ‘06, they entered into a partnership with Concord Ventures, dropping $162 mill into the deal. As of last qt., that investment was worth less than $73 mill.
AKR: No maturities due until 2011. The company has 3 projects in development, total cost of $206 mill. They will survive.
BKD: A $230 mill credit facility shrinks to just $75 mill by June of 2010. With over $700 mill due in ‘09, BKD looks toasty.
LTC: Decent balance sheet, with $100 mill line of credit, no development costs, and just $31 mill due in maturities through 2011. However, if you look a little closer, you will find 25% of their portfolio is close to default, with SRZ and ALC as egregious tenants.
FRT: Grocery anchored portfolio, heavily shorted. With close to $400 mill due, over the next two years, and only $175 mill in cash, including a line of credit, it’s safe to assume, FRT will need to raise a lot of cash. In addition, between 2011-2012, they have another $450 mill due.
EXR: Liquidity concerns. Due to economic environment, the self storage space has endured significant declines in occupancy. The company had about $500 mill in capital needs, over the next two years, with $240 mill in cash, including a line of credit. Looking out into 2011-2012, they have another $300+ mill due in maturities. If they are not bought out by PSA, they are toasty.
VNO: Keep an eye on the Hotel Penn and Farley Post Office sites. Should they land a solid tenant, the stock will rip higher. Analysts are a bit overzealous in their occupancy assumptions of 95% and 94%, for 2009 and 2010. The company is richly capitalized, via exorbitant lines of credit. With more than $9.5 bill in debt due, from 2009-2012, they most certainly will need the banks to buttress their balance sheet. With approximately $4.5 bill in cash, including a $2.2 bill line of credit and $500 mill in projected free cash flow, VNO will start to run out of money by 2011, providing the current environment does not rebound.
PLD: This company is doomed. They have a $3.2 bill line of credit expiring in 2010 and more than $5 bill due by 2012. With only $975 mill in cash and a $1.2 bill line of credit, they will need to raise significant capital.
SNH: With only $3 mill due, over the next two years and $400+ mill in cash, including a line of credit, SNH will survive.
ACC: With more than $550 mill due from 2009-2012, and only $180 mill in cash, including a line of credit, ACC will need to raise a lot of money or go away.
CBL: More than $1bill needed, over the next two years and less than $200 mill in cash, CBL is going to zero. No doubt.
WRI: With approximately $1.9 bill due from 2009-2012 and $280 mill in cash, including line of credit, WRI is stuck inside a murderhole. They will need to raise more than $500 mill, within the next 12 months.
GGP: Done. The repercussions of them defaulting on nearly $28 billion in debt will be felt.
KIM: They need to raise $400 mill by 2010.
TCO: Not as bad as their peers. They should survive.
PEI: With more than $1.2 bill due by 2012 and less than $90 mill in cash, PEI will default, barring divine intervention. They need to raise $1bill inside of 18 months.
ESS: Not a terrible balance sheet. Nonetheless, they will need to raise capital by 2010.
EQR: As of now, they have a decent balance sheet. However, within the next 4 years, more than $3.9 bill in debt is maturing. If they are unable to refinance, the company may start to run low on cash by late 2010.
HME: With over $850 mill due inside of 4 years and less than $150 mill in cash, including a line of credit, HME is heading towards insolvency and its shareholders don’t even know it.
UDR: They need money right away. They will need to raise at least $400 mill by 2010.
CPT: Big Texas exposure. With more than $2 bill due by 2012 and only a $445 mill line of credit to rely on, CPT need to raise capital or sell off assets. Either way, it will be dilutive.
SPG: They have over $3bill in cash, including a line of credit and a little more than $12 billion due from 2009-2012. In the near term, the company is adequately capitalized, considering the company generates significant free cash flow. However, after 2010, providing the commercial real estate market has not recovered, the company will need to sell assets or refinance their debt, in order to meet debt payments.
DDR: Another retail REIT with a horrendous balance sheet. They have more than $5.4 bill due from 2009-2012 and a little more than $250 million in cash, inclusing a line of credit. The company still enjoys decent free cash flow. However, they will need to come up with a cool $1bill by 2010, in order to meet debt payments.
Bottom line: Right here, right now, I am unveiling my revised “Reverse Four Horsemen of Certain Death.” BEHOLD: MAC, WRI, ACC and HME.
UPDATE: Send your bills to the Fed!
[youtube:http://www.youtube.com/watch?v=DRper3L6xN8 450 300]
The Fly has a supercomputer for a brain!
Oh, and Zombie sucks!
http://www.youtube.com/watch?v=3dENsduWXrg
a much needed pick me up video in today’s troubling times. http://www.youtube.com/watch?v=i5vRPKIS5UM
May HME go to zero! I am heavily short it from 32.
Fly is this you??? http://www.rollitup.org/members/horatio-clawhammer.html
But isn’t the gov’t attempting to bail them (and all debtors) out already? The government is determined to devalue the dollar, spark inflation, and kill those to whom money is owed.
The responsible saver and investor, with a strong USD-based balance sheets …with cash, will be the losers. Lesson: The worst will be first …fail early …fail big.
By the way an update on Fly’s reverse horsemen from the day he unveiled them, as promised:
HME: -9.99%
ACC: -10.66%
MAC: -37.96%
Developing…
Heh, well you never know but figured I would ask 🙂
Gap
That’s funny.
No, that is not me. HORATIO does not smoke herb.
And here is how my Four Horse(s)(men) of death have performed since I listed them:
Barbaro- still dead
Seabiscuit- still dead
Willie Shoemaker- still dead
UNCBBall team- still breathing
Thanks Fly,good post.
Good post. One thing you missed though.
In your Prologis (PLD)assessment of $5Bln due by 2012, you included $3Bln of convertible bonds, which the company can repay with shares. They are not obligated to pay cash, provided their shares are still listed on an exchange. They’ve also been retiring debt at 70 cents on the dollar and just announced a big asset sale.
The equity might still suck, but the company’s ridiculous terms on their convertible bonds will allow it to survive. Personally, I’m long 2012 bonds at $55, but have no thoughts on equity.
Wow, Fly, thanks for the reseearch paper. Good chit.
Fly-
Very good debt analysis, and I agree with the perceived difficulty of rolling the debt/paying off at d-day. But wouldn’t a massive collapse of the CRE market be fairly easy to forestall by simple Fed reflation? If avoiding deflation is the ultimate goal of helicopter Bernanke, wouldn’t expanding the balance sheet to provide credit to the CREIT’s make a ton of sense?
The fed could provide half the financing the entire industry needs for ’09 and only expand its balance sheet by 2.5%. I agree that it still makes sense to bet against the really toasty names, however.
To be clear, I should say that it would seem to me that the fed gets a ton of bang for its buck if it lends to the big CRE names – $1billion in asset-backed loans to a CREIT begets $10-15billion more investment in CRE mkt even at traditional leverage. This is preferable to keeping the $1billion and watching the system delever by a corresponding percentage.
You need to watch the carefully. the Australian government recently provided direct funding to the real estate industry, so i could imagine the Fed doing the same sort of thing too.
To Wall Street:
No hero in your tragedy
No daring in your escape
No salute for your surrender
Nothing novel in your fate
Christ, what you done?
The O’man doing his best to bring world’s best practice to Wall street and related industries: that of the North Korean agricultural sector.
Administration Seeks Increase in Oversight of Executive Pay
http://www.nytimes.com/2009/03/22/us/politics/22regulate.html
My feelings on the about to be announced Geithner plan.
From the NY Times:
The plan to be announced next week involves three separate approaches. In one, the Federal Deposit Insurance Corporation will set up special-purpose investment partnerships and lend about 85 percent of the money that those partnerships will need to buy up troubled assets that banks want to sell.
In the second, the Treasury will hire four or five investment management firms, matching the private money that each of the firms puts up on a dollar-for-dollar basis with government money.
In the third piece, the Treasury plans to expand lending through the Term Asset-Backed Secure Lending Facility, a joint vent
Read it again:
One part of the plan will have the FDIC set up partnerships with various fund managers to manage toxic assets. (Of course Pimco, or better known as Pimp &Co will get more than a look in.
One deal is that the FDIC will loan non-recourse 85% of the money for toxic assets. The obvious intent is to get these assets bid up away from the banks and will of course mean that the crappiest shit goes in there as the managers will have very little risk other than 15%. Additionally they will be able to participate in the parts of the plan where I would assume to better assets get moved.
So in summary, the taxpayer get hit and the banks get a free pass.
In sum, buy bank stocks but look out of the real economy further down the road as taxes will have to be raised to pay for all the worthless shit.
Job Experience:
Community Organizer
Pimp
J
Is it just me, or have you toned down your bullishness over the last few weeks?
I was wrong, Fly. If that’s what you want to hear from me. You should have asked earlier as I’m not really afraid to admit mistakes.
Lost in stocks but made up for it in currencies.
I thought at the time the monetary stimulus would hit earlier. However various categories of the monetary ags actually fell in December/ January, only picking up again in Fed.
http://research.stlouisfed.org/fred2/series/M1?cid=25
This additional boost by the fed could it it. So yea, for a short while at least I’m pretty positive on banks.
What about you? What do you think of the banks after this plan?
Repeating a snippet of the article quote J posted:
One deal is that the FDIC will loan non-recourse 85% of the money for toxic assets. The obvious intent is to get these assets bid up away from the banks and will of course mean that the crappiest shit goes in there as the managers will have very little risk other than 15%.
As bad as you make it sound, J, the plan is far worse. Farther down in that article, you will learn that the Treasury will provide up to 80% of that 15%, leaving the investors putting up as little as 3% of the purchase price.
A low-priced call option is what it is.
The deal is so bad, that a logical move by a bank would be to set up a non-bank subsidiary and use it to buy what it knows to be the best of the crappy assets. The bank side of the company gets blow jobs and bags of cash from the treasury, and the non-bank side captures all of the future upside with virtually no risk.
If this plan goes through as leaked, you can stop worrying about bonuses and executive compensation at the companies receiving TARP funds. People at the TARP recipients who have knowledge of the nuts and bolts of the bad assets will jump to the 3% funds and share their knowledge in return for an equity interest.
I don’t need you to admit being wrong; I already knew that. I am just monitoring the sentiment of you fuckers here, to get a feel for the overall sentiment.
For example: Once PERMABULL JAKEGINT gets his head out of his ass and turns bearish again, I will know the ABSOLUTE BOTTOM has been achieved.
However, something tells me, PERMABULL JAKEGINT will never turn bearish again,even if an armed revolution broke out in Virginia. That man would still talk his “earl” and inflation plays.
Banks will be hated after this plan. If we keep losing 600k jobs a month, the hate will no longer be contained within the bank universe.
Bank stocks are a different matter. In the short run, I’d guess they have a field day. The question is what the government does to common shareholders when the taxpayer-funded happy days at the banks stick out like a healthy thumb in a decaying economy and the voters form angry mobs.
It is too late to turn things around with looser credit and low interest rates. Jobs are what we need. Consumers are in shock, and aren’t going to snap out of it until jobs are secure or easy to get.
Fly is getting punchy. I prescribe an active day of trading, repeated until the shakes are under control.
DAYTRADER OTTNOT is delusional, regarding “The Fly’s” current state of mind. He and PERMABULL JAKEGINT and RETARDO ROBERTO should go on vacation to Atlantis together.
You are just trying to bring me down, because I hold my busted up old radio together with real duct tape instead of that supermarket junk. And, my kids are better looking.
A sure sign that we are being too generous to the banks: Washington Mutual is suing over the loss of its bank subsidiary.
Fly:
answer my question if you please. What do you think happens to bank stock with the plan and the fed taking action the way it has?
Gun to you head of course seeing you don’t like the banks.
Truth be told, I got tangled up in January, was bearish in Feb, but became more optimistic in March.
There fly, there’s month by month run down of my bull/bear views.
J wrote:
“In sum, buy bank stocks but look out of the real economy further down the road as taxes will have to be raised to pay for all the worthless shit.”
*****************************************
Whatdafuk you talkin’ about?
Because of the forthcoming deficits of $7 to $9 TRILLION dollars,Obama may be forced to SLASH your taxes to pay for it!
We KNOW this is true, cuz Wingnut economists /pundits / politicians like Larry Kudlow, Neal Boortz, Arthur Laffer, Steven Moore, Limbaugh,
Sean Hannity, Richard Shelby, John Boehner, John Cornyn, Mitch Daniels, and a multitude of others always say “When you CUT TAX RATES, you bring in more revenue!”
So brace yourselves for the upcoming OBAMA TAX CUTS, people!
plan will fail. banking disaster is all but assured.
Fly:
So you think the Fed has a limit on the amount of fiat money it can print? What is the limit?
And
If they lift $1.5 trillion out the balance sheets why would it be a disaster for the banks?
These are honest questions and not meant to offend.
The Fed has basically no limit in the amount of money it can produce. Bernanke has already said as much.
The banks hold around $1.5 trillion of questionable assets. If 80% of those are taken out of the books why would the banks be such a disaster?
Wells Fargo is increasing it’s ATM fee to $10
Short that P.O.S.
Since the Fly wanted a bearish outlook, here is mine.
Levels I will be watching to breakdown:
SPY 75.77 70.42 64.56 60.72 (One of the last 2 should hold, I am in the middle at 61.75)
SPX 754.70 700.19 641.05 605.59 (Same sentiment about last 2, I am thinking 614.78)
I won’t pay more than fifty cents for C. The best scenario for bulls this week will probably just be a trap on Monday. Turnaround Tuesday will have meaning this week, as it starts the push the test to the BS bottom that was called. Any loss of the low numbers I posted above will only lead to the real GD (Not to be deemed II).
Provided they hold, it should lead to a nice rally (with luck until August), and hopefully stronger market. So far the only significance this bear market has (aside from the GD), is that we had a longer ways to fall. Government fuckery is here to stay, so things will do what they want them to do. This all reminds me of when we were out of oil and gas in the 70’s, and somehow today there is a surplus. I never thought I would see 4.00/gallon gas in the midwest before I died, now I know I will see up to twice that before I pass.
JFF
J
Precisely. The Fed cannot continue to print money without the people taking pitch forks to their necks.
Public opinion will turn against them in a big way, forcing them to respect the will of the people.
Ottnot;
That’s my point, and thanks for adding to it. The deal lets the banks get away with murder.
from an Austrian school perspective this shit is very bullish for bank stocks,as this and all the other fucked up actions add to inflation and stocks always do well at the commencement of an inflationary boom. This in no way suggests that we have a healthy economy. not by a long stretch as it will tip over in a short period of time.
Fly, great analysis. The question is why aren’t you use your analysis and short the fuck out of the four horsemen?
Fly- lay off the Pinot, eh?
____
Pinot is for ladies. Real men drink Bourdeaux, which is sort of oxymoronic if you think about it.
Yea, anything from frog land is a ladies drink, except Chateau Y’quem from the 60’s which we sucked down one day at Oceana.
Hey, jake did you ever do any of those clients do’s at CS when we used order 30 year old wine to impress the idiots.
I drank a 1960 margot and whole series of vintages on a wine tasting night. Stuff actually tasted like brandy in the first gulp.
Oh for the good old days on Wall street.
No fucking wonder those lazy slobs on main street are so pissed. they could only dream of this shit.
Now they use congress to stop this excellent behaviour.
Main street sucks big time.
That’s some serious fucking grape.
I should throw an Egregious iBC “Grape Party,” where only 1960 vintages are served.
$1,000 per head.
Grand Havana Room, NYC.
Hey Fly:
We ought to have a party with all those vintages and report to it the press. I’d even fly out for that.
It would send main street batshit crazy.
Fly, it was around 1998 and even then it was 3,000 smackers a bottle.
Some fuckers left their Chateau 1960 Y’Quem and i was going around my table sucking down full glasses of that shit.
That shit was like angels dancing on your tongue. It was better than sex.
Nice.
As far as banks go, they were beaten down so badly I couldn’t resist taking advantage of bear market rally run ups on them during extremely oversold consitions. I couldn’t stay in them very long or I’d be angelo’d completely.
Long term, I’m still trying to get a vision of where I am going with all of this. Back when gold was 260 per ounce (2002) I was buying actual gold coins at the time for my daughters in case I was hit buy a beer truck on my harley. My thoughts on the banks right now are similar in that the big names will dominate eventually and it wouldn’t hurt to buy some big name bank shares on the next bank bottom.
I understand the moral dilema that many have regarding what is happening right now, but sometimes you just have to assess reality and try to determine where it is going. Banks are here to stay. Borrowing is here to stay. Our society does not operate off gold coins (despite they used to be a good buy for collectors).
There is a cornfield in the midwest where the train speeds up as it crosses some dirt roads that have no train signs (not even a warning). When I was a kid I’d ride my dirtbike over the tracks but I knew what times the trains typically rolled through. When CAP commented that JPM was a good short at 15, my thought was “this guy needs to step off the tracks for a minute”.
http://www.taxdayteaparty.com/
“Precisely. The Fed cannot continue to print money without the people taking pitch forks to their necks.”
This is a good perspective – but I think its pretty much wishful thinking. The current printing levels/committments might already be enough to cause hyper-stagflation. But if not, there is more and more money creation sure to come.
Printing money to bailout PENSIONS soon, followed by printing for the larger than expected deficit, then for the airlines. And maybe even retail will get saved. I have to think that “Lid’s Etc” is in need.
I am guessing they will draw the line at Casinos. But that’s about it.
The pitchforks won’t come out until way after – unfortunately. Hope I am wrong.
I kinda of agree with you, Eric. The Fed this week basically said it was going to print $1 trillion and they were considered courageous for doing so or there was deadly silence about their action from Main Street.
The pitchforks will come when the Fed is unable to stem inflation without causing another crash as it tries to stem the tide of the monetary expansion.
And let’s remember people like the feeling of inflation at the outset. It’s like gin and tonic. The first one always feels good. By the second/third one you’re heading on a downer.
Good discussion, j, Fly, and others.
So what about SRS for a play?
What day is the party at The Grand Havana Room?
http://tinyurl.com/cl95nx
The damage here is primarily the explosion of Fed government debt. The current $11 trillion explodes quickly to $15 trillion in a few years and $20 trillion by 10 years. Imagine (not hard to do) an average 5% interest on $20 trill – it is one $trill per year. The Fed government is primarily a transfer agent and perpetual debt machine. It now consists of 75% of the budget being interest on debt, Social Security, Medicare, and military. It is cheating on capitalism – the penalty is inflation and currency debasement. No, you cannot have your cake and eat it too.
J- I was referring to. Pinot Hrigio- the white Italian cubo.
Wish I knew why the mobile page only shows the too line of this message. __
Crap, as you can see, not seeing leads to typos. Oddly, it is now showing the whole message box now.
The currency debasement is written off due to all countries doing it too. The inflation is agreed to be a better poison than deflation. Everybody lies to himself that inflation is increasing my income – nevermind that the income will not buy more in real terms. I want to copy the Fed governemnt but the government threatens to put me in prison if I do copy it – I basically want to create a Ponzi scheme until death – my estate will be nothing but debt but I will not care.
I suspect the price of everything (including real estate) will rise along with the availability of money. Debt will be wiped out by inflation, the stock market will go up, and salaries and wages will increase substantially in the coming years. Most people will pay off their existing debt. Eventually money will tighten once the process starts to take effect to keep things in check. We will rebuild our infrastructure and establish a long term position for success overall. I’m very bullish on the US. Am I happy about the government borrowing? Not really. But, it is what it is.
The record of the FED – a dismal record indeed – is that it swerves from one side of the road to the other – it runs off the right side and jerks the wheel too much and then goes off the left – it slams on the brakes and then the gas. It will go to hyper inflation because it is run by academics. Very few economists study economic history which is played over and over to different tunes – primarily too much credit is done over and over.
Yes, it’s difficult to hit a moving target. But when in US history was the US ever an economic pushover. The public debt pisses me off, but I know that long term this crap will end up just being a swerve around a pothole. The pendulum swings back and forth as you mentioned. In the end, this country is still a fledgling economic power sufferring from growing pains. Just wait, the best days are yet to come.
You “know”? The coming $20 trill in debt is a huge millstone around the neck of the economy. No way around it. The politicians and the FED are trying to kiss the hurt like mommy and make it stop but any cure for the pain only creates another problem. Pain happens – it cannot be taken away without a price – these people have not discovered nirvana. Remember, the next “crisis” is Social Security – Medicare – which will be a $100 trillion one.
The only problem I see with your bullish scenario jd is that if oil continues to be priced in dollars and true inflation takes hold it will offset the higher income advantage and energy costs will prevent debt reduction. If home energy bills double or triple and gasoline costs do the same simply as a function of dollar devaluation people are going to have a real tough time paying down debt. What do you think?
Anyone who believes Fed debt is no problem should consider advocating running the Fed entirely from money creation – abolish all taxes – just print up the money for the Fed government – see the problem?
Bedframecoils.com
As seen on interweb.
Snapini
Contractor, I did think about whether paying down debt more easily would happen. If my salary doubles, my bills double, stock portfolio goes up, food costs twice as much, whatever debt I had will be half by comparison. I should be able to boost the size of my debt payment also. Those who suffer the worst during this whole scenario are those storing hords of cash in coffee cans. Their savings will be half as valuble. The winners are those who invested in the market after the crash (somewhere near the bottom) or had huge debt. Naturally I’m not saying this is certain, but it is a possible outcome. The oil problem is not resolved. That will require some attention.
The corrective action we need to take with the Fed is for government to work harder to live with a balanced budget more frequently. It may take some sacrifice, but it’s not permanently insurmountable.
The Fed government needs to be slashed by 50% and free enterprise needs to be adopted and a national sales tax instead of the current monstrosity tax system. Free enterprise is not anything goes – it is not a trillion dollar hedge fund business operating without any restriction and a shadow banking system doing an end run around regulation. Free enterprise can be managed on a prevent excess basis.
The other group who will be hit hard are those who aren’t gainfully employed. If services are cut back on, it will be more important to get a job. I’m sure there will be enough infrastructure jobs and a stimulated economy that unemployment should drop. Those who choose to not work but live off a cash savings chest are going to get pummeled. Senior citizens and retirees living off fixed incomes may need some help from families if they are living on the edge (or government services if it isn’t slashed).
Public opinion will turn against them in a big way, forcing them to respect the will of the people.
That, so far as I know, is the funniest thing you’ve ever written.
Fly…not a big poster here but avid reader.
This is some of your best work ever…that you have made publicly available at least. Thanks for sharing.
Well another trillion ready to be shit out into the market. What’s another trill when your rollin on dubs and smoking doobs up in the White hizzie.